Chile: Technical Assistance Report-Tax Revenue Projections

Technical Assistance Reports, May 9, 2025

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Accuracy in fiscal revenue projections is described as a fundamental pillar of the budgetary process in Chile.
In contexts without economic shocks, differences between tax revenue estimates and actual collections were minimal.
The pandemic and numerous temporary tax policy measures introduced significant uncertainty that has complicated tax revenue projections.
Identifying sources of gaps in tax revenue projections and communicating them transparently is emphasized as crucial.

Historical projection performance:
- In stable (no economic shock) contexts, deviations between estimates and collections were minimal.
- The pandemic period saw large deviations driven by economic shocks and temporary tax measures.
Main drivers of projection gaps:
- Temporary tax policy measures.
- Economic shocks (explicitly the pandemic).
- Use of proxy variables that may not accurately reflect the underlying tax bases.
- Insufficient assessment of discretionary changes in tax policy and administration.
- Weaknesses in institutional frameworks and transparency around projection methodologies.

Improve proxy variable selection:
- Use proxy variables that most accurately reflect the tax bases being estimated.
Reassess discretionary changes:
- Critically and prudently assess and revisit the impact of discretionary changes, both in tax policy and administration.
Strengthen institutional framework and transparency:
- Promote clear and consistent methodologies.
- Ensure continuity and regular updates of the tax revenue projection process.
- Improve communication of sources of projection gaps to stakeholders.

Keywords: budget management, corporate income tax, revenue projections, Tax collection, VAT.
Language: [This report is only available in Spanish]

International Monetary Fund. Chile: Technical Assistance Report-Tax Revenue Projections (Technical Assistance Reports 2025, 053).

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